The Reporter (Addis Ababa)

Ethiopia: Indian Firm Eyes Textile but Is Hindered By Cost

Indian-based Sutlej Textiles and Industries Limited has been in contact with Ethiopian officials for the past seven months to head ways to the local textile sector with less success, The Reporter has learnt.

Sutlej communicated its intent to the government to join the textile business in Ethiopia but has been lingering for the past seven months concerned with transportation and construction costs, which, according to Manoj John, vice president for strategic initiatives at Sutlej, are higher than most countries, mainly compared to India where it has set up shop.

If it is possible to reduce costs, Sutlej has interest in investing in 25,000 spindles immediately as an initial investment while planning to raise its investment to 50,000 spindles in the second phase. With an estimated investment cost of 25,000 birr per spindle, the first phase alone will cost Sutlej some 625 million birr, according to John. "We will submit our formal business proposal to the government in a month or two," John told The Reporter.

He said he had been meeting with both federal and local government officials about accessing a plot of land but with no success so far. "This time, I am having a fresh round of meetings. Meeting with the minister of agriculture, I am getting familiar with the federal and regional set-up here.

I do not know how much success I will have this time around," Mr. John said. If successful, his investment will sit on 200 acres of land. But to kick things off, the company needs half of the total land to build a textile plant that will integrate spinning and weaving. Terry towel manufacturing is the other alternative to look at, according to Mr. John.

Though it is Sutlej's first time to Africa, the company is reputable in India with a turnover of 20 billion rupees or close to eight billion birr annual. Sutlej is also eying coffee in Ethiopia. As far as coffee is concerned, the company is looking to invest in an Arabica coffee plantation for which it needs two thousand hectares.

But that seems unlikely to happen since Ethiopian investment law reserves the business only to Ethiopian nationals. Meanwhile, at the moment there are about 15 foreign textile companies awaiting the completion of the construction of the Bole-Lemi industrial zone located east of the capital. According to information from the Ministry of Industry, all of these companies, mainly from South Korea and India, have settled their initial payments while some are installing machineries in the new sheds for production.

Ads by Google

Copyright © 2014 The Reporter. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.